ICE Deal for Black Knight to Proceed After FTC Drops Challenge

Leah Nylen, Bloomberg News

(Bloomberg) -- Intercontinental Exchange Inc. can move forward with its takeover of Black Knight Inc. after the US Federal Trade Commission accepted a binding settlement that will see key mortgage software products sold to rival Constellation Software Inc.

FTC commissioners voted to accept the settlement Thursday, the agency said in a release. Under the agreement, the companies will divest Black Knight’s Empower loan origination software and its Optimal Blue business to Toronto-based Constellation. Optimal Blue is the most widely used software for identifying and securing loan rates, used by lender for about 40% of the residential mortgages originated in the US each year, the FTC said.

The deal marks the first time since Lina Khan became FTC chair in July 2021 that the agency has settled a case after filing a lawsuit to block a deal.

The FTC’s “order provides structural relief and a variety of tools to preserve competition in these critical markets,” Henry Liu, the director of the agency’s Bureau of Competition, said in a statement.

Black Knight shares were up less than 1% at 3:11 p.m. in New York. Shares of ICE were down less than 1%.

The companies said last week that they plan to close the deal by Sept. 5.

The companies also agreed to seek FTC approval before acquiring any other businesses related to loan origination or product pricing for the next 10 years.

The FTC sued in March, alleging the combined company would dominate the market for loan origination software, which lenders use to manage their workflow for home loans. The FTC also alleged ICE and Black Knight would have the incentive to push customers to use its other mortgage services instead of those offered by rivals, the FTC said.

Under Khan, the FTC has taken an aggressive approach to mergers, challenging a number of high-profile deals. But it has struggled in court, losing cases this year to block a Meta Platforms Inc. acquisition and Microsoft Corp.’s Activision Blizzard Inc. deal. The agency is appealing its loss in the Microsoft case. It is also negotiating a potential settlement with Amgen Inc. over its proposed acquisition of Horizon Therapeutics Plc.

(Updates with additional details, share price beginning in second paragraph.)